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JC Political Thread - For all things political Part 2

Discussion in 'The Pub' started by minux, Apr 4, 2011.

  1. c2105026

    c2105026 Member

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    Assuming everything goes ok with my job, I am looking at buying in Orange in the 2nd half of next year. Budget maybe 350k-400k, enough to get 3br house in almost anywhere in town.

    To everyone who lives in a big city and whinges about house prices - you are not a tree. Move! In regional areas there may well be a very good job that you could take up or even transfer your skills to. Many business opportunities as well, it that's your thing. Welcoming communities as well.
     
  2. Nitro_X

    Nitro_X Numbskull

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    Yeah, that's what Joe Hockey and Scott Morrison reckon is the solution to Australia's housing affordability issue.

    This might work for select individuals but it aint the solution.

    Is it your first home? Or are you using equity from other property sale?
    Victoria and I think Qld are enticing first home buyers into regional areas with extra subsidies.

    Recipe for disaster if you ask me. Our politicians helped create the debt mess we are in now, they don't care about sensible policy.
    First home buyer grants are nothing but a gift to bankers and property developers.
     
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  3. Nitro_X

    Nitro_X Numbskull

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    Wait...what?
    Second half of next year?? That's like 18 months away dude.
    A lot can happen in that time and you're budgeting that far ahead of time....for Australian property and you don't even know if your job will work out?
    Wow.

    Good luck bro.
     
  4. c2105026

    c2105026 Member

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    Job continuation is subject to probation at 6 month mark but I'm confident at this stage. If you are saving up for a house deposit it doesn't happen overnight.

    Not a first home buyer, no equity. Let's say I'm coming out of a rough patch on a few different fronts.

    I fully agree that anything that gives first home buyers any extra liquidity effectively doesn't work as it just pushes up prices in a certain part of the market.
     
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  5. Nitro_X

    Nitro_X Numbskull

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    good luck man....hope things work out for you.
    Country life is underrated.
     
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  6. Reaper

    Reaper Tells it like it is.

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    I'm sure it will at one stage or another however read enough articles and you will find that economists have successfully predicted about 45 of the last 2 Australian recessions

    Ok. It is a lot of money but why is it any worse than say 2.5GDP?

    Have you done any research to find out why?

    One of the primary motivations of the GFC started waaaaaaaaay back in the early Clinton era with the misguided notion that everybody should be able to buy their own house (sound familiar?) and thru active government policy and plenty of stupidity amongst the banks, *many* loans were written to people who simply should not have been given a mortgage. Couple that with a few fucked up conditions Americans have with regards to loan defaults and the disaster was a matter of when, not if.

    Quite possibly however prophasising some future doomsday at some non specific future date is about as intelligent as saying that one day into the future it's going to rain/not rain/whatever.

    Of course presenting a well thought out solution to the problem would be the ultimate however very few of the doomsdayers seem to have an answer to that

    And??? If you are in the market for a house and came home with a carpark then you are stupider than I give you credit for. Of course if you were looking for something to invest in and the ROI stacked up then why not?
     
  7. Nitro_X

    Nitro_X Numbskull

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    damn, Reaper.....you're hard core bro
    Like a pitbull
    (I like it when someone challenges me intellectually....thumbs up)

    Yeah I've done a lot of research, most of what I wrote is not my own work, it is from reading the articles and comments from finance experts and economists....who are not well known in the mainstream.
    The mainstream media is big corporate....with an agenda.
    Like stock market trading...you have to do your own research and take your own risks based on your own personal situation and your appetite for financial risk.

    The Property Council of Australia...a powerful lobby group who claim to care about working families and housing affordability, are funded and backed by multi-billion dollar corporations.
    ie: AMP Capital, and property developers like Lendlease Corp and Stockland....who also 'land bank' and buy up big shopping centres all over the country......they have shareholders who are their FIRST priority.
     
    Last edited: Mar 20, 2017 at 7:58 PM
  8. Nitro_X

    Nitro_X Numbskull

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    Err. ya barking up the wrong tree mate.
    I threw in that article for a Sydney car parking space at $400k for a laugh.
    I guess u missed my "LMAO" at the bottom.
    Plus, the car space had a separate title, it was for sale as a stand-a-lone "property" ...you didn't need to live in the building. You could own just that space....
    Just LOL at anyone with that sort of money to throw around for parking spot!
     
  9. Nitro_X

    Nitro_X Numbskull

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    As a side note,
    My personal view on residential housing is that homes, whether an apartment or detached house, are a place to raise and nurture a family.
    To have some stability and a place to rest after a hard days work.

    Not treated as a commodity to speculate on for quick profit, which I think is ultimately detrimental for society as a whole.....eg: house flipping has become somewhat of a national pastime for cashed up investors and now thousands of Joe Averages.

    This is why I want to see negative gearing and capital gains tax concessions scrapped.
     
  10. Reaper

    Reaper Tells it like it is.

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    Fundamentally that is correct but when 10,000 people want to live in a place with 500 beds, something is going to give and shit's gonna get expensive.

    Why should CGT on property be treated any differently than any other asset class?

    Dump neg gearing will have exactly the opposite effect on the group that most want to help most. Go study a bit of history when the Hon Paul Keating tried it in the mid 80's.

    You seem to be missing a great part of why houses are flipped. Usually an 'evil' developer is involved who will turn a single residence into 2 or more residences and then on sells them for a profit. For whatever reason people seem to hate it as they ruin the neighbourhood and blah blah blah for whatever number of reasons. But - people don't ever acknowledge that housing supply has to happen from some where.

    Property is exactly the same as near every other de-regulated commodity and is beholden to the laws of supply and demand. Bottom line is that the closer supply is balanced with supply, the more stable prices become. Sadly in most of metropolitan Australia, supply is greatly less than demand. That is a major motivation for why prices are going up.

    Further, in a market I know first hand - Melbourne metro area, the town planning process overseen by local council is farcical with decisions routinely taking 6+ months. In the case of my own single dwelling, never being built on before residential block expected to take 9 - 12 months for council approval. That doesn't even scratch the surface of delays caused if the proposal gets knocked back for some stupid reason and gets taken to VCAT for subsequent approval because some local councillor has something up his backside against development in his local patch.

    I presume NSW is the same as is Qld. WA and rural Qld are both somewhat different being cyclical with the resources sector. When it comes to SA - meh - who cares, nobody really want's to live there anyway.

    All of this time adds a **lot** of un-necessary cost to a development which the consumer ultimately pays.

    Really if government wants to see housing prices fall they need to address the supply side via zoning and a town planning overhaul combined with making local council accountable for both their decision process along with streamlining the decision making process.
     
  11. Nitro_X

    Nitro_X Numbskull

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    I'm ok with capital gains tax concessions on the family home, but not for investment properties.
    Reaper, your field of view is somewhat narrow, and it mirrors that of our Treasurer and Prime minister.
    You also sing the supply mantra of all the wealthy politicians and property lobby groups.
    Currently the supply issue is a myth, because it is not REAL demand it is artificial demand based on speculation and manipulation of the money supply and interest rates.

    There is a big difference between real demand and artificial demand and speculation.
    Like I said, houses are not a commodity, they are a place to raise a family.
    Also, The cost to build has remained in line with general inflation for the last quarter century, it is the land price which has defied gravity.
    As for planning and process delays....well any delay to get NEW housing stock onto market will help elevate prices.
    Property developers land bank, deliberately restricting supply to push up prices....the bureaucrats are in on this game.
    Investors are buying up more existing properties than new properties.

    Why houses are not and should not be classed as commodities:
    • Definition of a commodity: from Investopedia
    What is a 'Commodity'
    A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type; commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

    BREAKING DOWN 'Commodity'
    The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer. A barrel of oil is basically the same product, regardless of the producer. By contrast, for electronics merchandise, the quality and features of a given product may be completely different depending on the producer. Some traditional examples of commodities include grains, gold, beef, oil and natural gas. More recently, the definition has expanded to include financial products, such as foreign currencies and indexes. Technological advances have also led to new types of commodities being exchanged in the marketplace. For example, cell phone minutes and bandwidth.


    Types of commodity


    From Wikipedia:
    Petroleum and copper are other examples of such commodities,[3] their supply and demand being a part of one universal market. Items such as stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface and the perceived quality. The demand for one type of stereo may be much larger than demand for another.

    In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, sugar, rice. Soft commodities are goods that are grown, while hard commodities are ones that are extracted through mining.

    There is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the particular characteristic that it is usually uneconomical to store; hence, electricity must be consumed as soon as it is processed.

    Houses Should Not Be a Commodity
    http://www.irvinehousingblog.com/2007/06/25/houses-should-not-be-a-commodity/

    A great many people like it when houses go up in price. During a rally the bulls become intoxicated with greed and obsessed with owning real estate as an investment. However, once houses become an investment, the prices of houses begin to behave like an investment, and volatility is introduced into the system. You do not want houses to trade with the volatility of a commodities market. It causes more harm than good.


    Price volatility is a very disruptive feature in a housing market: the upswings are euphoric, and the downswings are devastating — and there are downswings. Declining house prices are emotionally and financially draining both to individuals and to the economy as a whole. The upswings create massive amounts of unsustainable borrowing and spending, and the downswings create economic contraction, foreclosures and personal bankruptcy. Is the ecstasy of the rally worth the despair of a crash? I think not, but we shall see
     
    Last edited: Mar 20, 2017 at 11:49 PM
  12. Skydrol

    Skydrol Active Member

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    If my understanding is correct, debt is "currency" based on Fractional Banking. As long the monthly debt payments are paid, the whole amount is count as good as paid in full.

    The USA banking system run that way.

    Let us say, you get $1,000 and is deposited in the bank. They keep 10% in case you want some and lend $900. The cycle repeats several times. The reality, from those $1,000 the banking system multiplied several times that amount; they just created currency out of thin air.

    I am not surprised the housing market is overvalued to back up the bank debts. If people default their loans, the whole thing will collapse like a house of cards.

    Is going to happen, the question is when and be ready when it happens.
     
  13. Nitro_X

    Nitro_X Numbskull

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    Skydrol
    The housing market and banking regulations in the USA are different to Australia and you guys have a significantly larger population than we do.
    However, according to the latest Annual Demographia International Housing Affordability Survey, Australia's median house price to median income is higher than the USA and all other major markets except Hong Kong and New Zealand....fueled by investor speculation on land price, not real demand.

    When a bank issues a mortgage to a customer, that debt is placed on the banks' balance sheet in the asset column, not the liability column, in other words the mortgage debt is considered an asset to the bank.
    But the mortgagee debt cannot be cleared until the loan capital + interest + fees are paid in full.

    Fractional reserve banking is a massive con job on citizens, the banking industry is privileged and protected.
    They can literally create money from thin air, lend it out to customers, charge interest + fees... and profit from it.
    No other commercial business on the planet is legally able to this.
    It would be akin to me starting a business selling office chairs, where I would buy 10 chairs from a real wholesaler, storing them in the warehouse as collateral, then phone up an imaginary chair wholesaler, and have 90 imaginary chairs delivered for free and sell them to real customers for profit.
    I didn't have to "work" for those 90 chairs I received them for free and can profit from their sale.
    No wonder banks make obscene revenues and profits.

    The other aspect of money is that it is no longer backed by anything "real" the US $ used to be backed by gold, and by default all other currencies, limiting how much money could be issued into the marketplace, until President Nixon disconnected the US $ from gold in 1971, the rest of the world followed suit, as the US currency was the default major currency of the world, still is.
    Theoretically enabling central banks to print money from thin air for ever and a day and buy whatever assets they choose, ie: government bonds (sovereign debt) - all governments issue bonds to make up the difference between their liabilities and tax revenues (budget deficits).

    But it's not just central banks who can buy government bonds, large investment funds and wealthy individuals can buy gov. bonds as an investment to profit from.

    There is more.....the IMF has created a thing called Special Drawing Rights (SDR's) which is not real money, and can be used, along with central bank money printing to pay off sovereign debt, for example, if a country defaults on it's borrowings, such the recent Cyprus debt crisis and Greek government debt crisis.
    Only 5 major currencies are associated with SDR's
    US dollar
    Euro
    Japanese Yen
    British pound Sterling, and last year, the Chinese Renminbi was included.

    That's the basics and the technicalities go way over my head....this shit is complex and rigged and manipulated by the wealthy insiders, politicians, bankers...and unelected bureaucrats.
     
    Last edited: Mar 21, 2017 at 2:59 PM
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  14. Sabbath'

    Sabbath' Road Boss

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    These two are linked closely and it goes to disprove your thoughts that there isnt a supply issue.

    Yes, existing properties are being bought by investors, and probably at a greater rate than what new dwellings are purchased. But there will be a statistic somewhere on google im sure you'll be able to find about the number of existing properties that are bought by investors, have the single dwelling knocked down and then multiple dwellings are put up on the same block.

    And guess what? They sell. Because there is a demand for people wanting housing. If there wasnt, people wouldnt be slicing and dicing every square meter of available real-estate because it wouldnt make sense from an investment point of view.
     
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  15. Reaper

    Reaper Tells it like it is.

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    TBH my attitude is that of a realist that analyses the situation for what it is rather than some mythical notion of what it should be

    rubbish. Demand is as simple as number of people wanting/able to buy a property in a given area. Cost of money undoubtedly plays a big part of regulating demand as does overall market sentiment. It's interesting to note that interest rates for investors is overall much higher than that for an owner occupier. You also need to look at the underlying demand when it comes to a given property market which is calculated by net population growth vs building approvals. I've been following this for near 15 years and in Victoria for all of that time I have only seen 2 quarters during the heights of the GFC where underlying demand was below building approvals. NSW was similar although WA fluctuated with the fortunes of the resources sector. Overall Australian underlying demand was over supply for 9 quarters out of 10 over that period.

    Lovely romantic notion there but at the end of the day it's a trad-able asset like anything else. Maybe it's not a true commodity but being fair it's a semantic argument at best. The bottom line is when there is competition amongst buyers prices are going to rise and when the number of sellers out number buyers then prices stagnate if not fall. There is no doubt the property market is in a bull run at the moment (for Melbourne at least) however only 5 years ago shifting property was near impossible with prices going sideways for at least 3 years or suffering some moderate falls. Those hardest hit were those needing to offload in the short term.

    For the most part if there is a liveable house on the land then investors will try to put tennents in there to get at least some return for their investment in the sort term before they are ready to develop the property. I hardly think this is a bad thing.

    So effectively your main objection to houses being considered a commodity is an inherent fear of it loosing value. Well from time to time house values do go down so get used to it. In reality any short term drop is of little concern and can be considered a bonus if you are buying/selling in the same market. Of course being a forced seller can be a disaster.

    The only thing we can be sure of is that there will be a correction of property values either via a crash or values going sideways for a prolonged period of time. When that happens is the $billion question and if you aren't comfortable with that then this probably isn't a good asset class for you. Then again a stock market crash will happen one day too and investing in government bonds has it's own risks too. Maybe putting your cash under the mattress is safer - oh wait - burglers! I guess we're all fucked :)
     
  16. Reaper

    Reaper Tells it like it is.

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    Although it fluctuates a bit 1st home buyers make up around 15% of all property purchasers, investors are around 40% and the rest is made up with those already in the owner/occupier market. It should be noted that investors are a mixture of those buying simply to rent out (the bulk) and the minority are developers.
     
  17. Skydrol

    Skydrol Active Member

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    Agreed... our banking systems are similar. As far the SDR is what I think is going to be new Global Currency. That is the only thing that makes sense to me on why the Central Banks want to crash their currency. A WW3 to prove the point that individual Nations are evil and 1 Global Currency to show to all as the economic savior. Of course, with that model, will show prosperity within a couple of generations and people will forget. The con job starts all over again, this time, at a global scale.
     
    Last edited: Mar 22, 2017 at 12:47 PM
  18. Nitro_X

    Nitro_X Numbskull

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    @Reaper
    Wow, bro!

    You win....I can't discuss this subject with you any longer....it would be illogical and pointless for me to do so.

    Have a good day.
     
  19. Skydrol

    Skydrol Active Member

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    This is tongue and cheek talking but try to understand what is going on. Is one of the multiple example on what is going on with the US and how the banking system is tied globaly. Take it as signal and/or indicator.

     
  20. Reaper

    Reaper Tells it like it is.

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    One major draw back of a central currency as the EU found is it's impossible for individual governments to control their individual economies growth via interest rates etc. Of course there are other mechanisms but regulating growth and spending of the populous via monetary policy is very powerful.
     

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